Big 3 on the Hill, on the Ropes

By CJP | December 4, 2008

Janes, if you love your Jeep, Saturn or Volvo, close your tender ears.  Otherwise…from the Senate Banking Committee hearing in Washington today, we’ve learned:

• The companies combined are asking for access to $34 billion in loans and financing;
• All three CEOs not only drove themselves to D.C. (two said they switched off with a friend), they’ll be driving themselves back to Detroit;
• A portion of the massive and murky credit default swap market would be tripped by a bankruptcy of any of the three.  Credit default swaps were called “the next shoe to drop” during the AIG hearings;
• A failure of the auto companies would be “cataclysmic” for the American economy, according to Mark Zandi, chief economist of Moody’s, adding, “You need to help them.  Now.”  
• Zandi explained that Chapter 11 would not be a restructuring, but would immediately lead to liquidation, since none of the companies could get financing that most firms access while they restructure;
• When Sen. Shelby asked if $34 billion was just the beginning of federal help for the companies, Zandi said, “There’s a high probability.  Yes.”

 

Topics: Economy, Senate

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